234 U.S.

199
34 S.Ct. 859
58 L.Ed. 1276

INTERNATIONAL HARVESTER COMPANY OF

AMERICA, Plff. in Err.,
v.
STATE OF MISSOURI, ON THE INFORMATION OF ITS
ATTORNEY GENERAL.
No. 166.
Argued April 29, 1914.
Decided June 8, 1914.

Messrs. Edgar A. Banceroft, William M. Williams, Selden P. Spencer,

and Victor A. Remy for plaintiff in error.
[Argument of Counsel from pages 200-202 intentionally omitted]
Mr. John T. Barker, Attorney General of Missouri, and Messrs. W. T.
Rutherford, Thomas J. Higgs, W. M. Fitch, and Paul P. Prosser for
defendant in error.
Mr. Justice McKenna delivered the opinion of the court:

Information in the nature of quo warranto, brought in the supreme court of the
state, to exclude plaintiff in error from the corporate rights, privileges, and
franchises exercised or enjoyed by it under the laws of the state, that they be
forfeited, and all or such portion of its property as the court may deem proper
be confiscated, or, in lieu thereof, a fine be imposed upon it in 'punishment of
the perversion, usurpation, abuse, and misuse of franchises.'

The ground of the action is the alleged violation of the statutes of the state
passed respectively in 1899 and 1909, and entitled 'Pools, Trusts, and
Conspiracies,' and 'Pools, Trusts, and Conspiracies and Discriminations.'

The facts alleged in the information are these: Plaintiff in error is a Wisconsin

corporation engaged in the manufacture and sale of agricultural implements,

binders, mowers, etc., and was licensed on the 5th of April, 1892, to do
business in Missouri under the name of the Milwaukee Harvester Company,
and on September 18, 1902, became licensed to do and engaged in such
business in the state. In that year in such business in the state. In that year New
Jersey was organized with a capital stock of $120,000,000 for the purpose of
effecting a combination of plaintiff in error and certain other companies to
restrain competition in the manufacture and sale of such agricultural
implements in Missouri, and the New Jersey company has maintained plaintiff
in error as its sole selling agent in Missouri. Before the combination the
companies combined were competitors of one another and of other
corporations, individuals, and partnerships engaged in the same business in the
state, and that thereby the people of the state, and particularly the retail dealers
and farmers of the state, received the benefit of competition in the purchase and
sale of farm implements. The combination was designed and made with a view
to lessen, and it tended to lessen, free competition in such implements, and
thereby the said corporations entered into and became members of a pool, trust,
combination, and agreement. In furtherance thereof, and for the purpose of
giving the International Harvester Company of New Jersey a monopoly of the
business of manufacturing and selling agricultural implements in the state, and
for the purpose of preventing competition in the sale thereof, plaintiff in error
has compelled the retail dealers in each county of the state who desire to handle
and sell or act as agent for it to refrain from selling implements manufactured
or sold by competing companies or persons. By reason thereof competition in
such implements has been restrained, prices controlled, the quantity of such
implements has been fixed and limited, and plaintiff in error has been able to
secure, and for several years enjoy, from 85 per cent to 90 per cent of the
business, all to the great damage and loss of the people of the state, and by
reason of its participation in the pool, trust, and combination, and by reason of
the acts and things done by it, plaintiff in error has been guilty of an illegal,
wilful, and malicious perversion and abuse of its franchises, privileges, and
licenses granted to it by the state.
4

The answer of plaintiff in error denied that it had become a party to any
combination, or that, in its transactions, there was any purpose to restrain or
lessen competition, or that trade had been or was restrained.

The case was referred to a special commissioner to take the evidence and report
his conclusions. He found, as alleged in the information, that the International
Harvester Company of New Jersey was a combination of the properties and
businesses of formerly competing harvester companies, and plaintiff in error
being one of such companies, and thereafter, by selling the New Jersey

company's products in Missouri, had violated the Missouri statutes against

pools, trusts, and conspiracies.
6

In exceptions to the report of the special commissioner plaintiff in error urged

that the statute of Missouri violated the equality clause and due process clause
of the 14th Amendment to the Constitution of the United States, '(1) because
said statute arbitrarily discriminates between persons making or selling
products and commodities and persons selling labor and service of all kinds: In
that each section of said statute applies only to articles of merchandise, and not
to labor or services and the like, the prices of which are equally and similarly
determined by competition, and may be equally and similarly the subject of
combination and conspiracy to the detriment of the public. (2) Because said
statute arbitrarily discriminates between the makers and sellers of products and
commodities and the purchasers thereof: It prohibits manufacturers and sellers
from making contracts or arrangements intended or tending to increase the
market price of the articles they make or sell, but does not prohibit purchasers
from combining to fix or reduce the market price of the commodities or articles
to be purchased by them. (3) Because said statute, as construed by the
commissioner, unreasonably and arbitrarily interferes with plaintiff in error's
right to make proper and reasonable business contracts, and deprives it of
property rights in respect thereto.'

These exceptions were urged and argued in the supreme court upon the filing of
the commissioner's report. Judgment was entered upon the report, in which it
was adjudged that by reason of the violation of the statutes of the state, as
charged in the information, plaintiff in error had forfeited the license
theretofore granted to it to do business in the state, and it was adjudged that the
license be forfeited and canceled and the company ousted from its rights and
franchises granted by the state to do business in the state, and a fine of $50,000
was imposed upon it. It was, however, provided that upon payment of the fine
on or before the 1st of January, 1912, and immediately ceasing all connection
with the International Harvester Company of New Jersey and the corporations
and copartnerships with which it had combined, and not continuing and
maintaining the unlawful agreement and combination with them to lessen and
destroy competition in the sale of the enumerated farm implements, and giving
satisfactory evidence thereof to the court, the judgment of ouster should be
suspended. The company was given until March 1, 1912, 'to file its proof of
willingness' to comply with the judgment. It was also adjudged that upon a
subsequent violation of the statute 'the suspension of the writ of ouster shall be
removed' by the court 'and absolute ouster be enforced,' and to that end the
court retained 'its full and complete jurisdiction over the cause.' 237 Mo. 369,
141 S. W. 672.

A motion is made to dismiss on the ground that plaintiff in error in its answer
simply denied that it had violated the antitrust laws of the state, and it is
contended that by not alleging in its answer that those laws violated the
Constitution of the United States, it waived such defense. It is further
contended that because the Federal right was not asserted in the answer, the
supreme court of the state could not have considered, and did not consider or
decide it. Decisions of the supreme court of Missouri are cited to sustain the
contentions. The decisions declare the proposition that constitutional questions
must be raised at the first opportunity, or, as it is expressed in one of the cases
(Brown v. Missouri, K. & T. R. Co. 175 Mo. 185, 74 S. W. 973), 'the protection
of the Constitution must be timely and properly invoked in the trial court.'

In Dahnke-Walker Mill. Co. v. Blake, 242 Mo. 31, 145 S. W. 438, it is said:
'The rule of this court is that so grave a question [constitutional question] must
be lodged at the first opportunity, or it will be deemed to have been waived. If
it can be appropriately and naturally raised in the pleadings, and thereby be a
question lodged in the record proper, such is the time and place to raise it;' and
that it is too late to raise the question after judgment in a motion for new trial.
In Hartzler v. Metropolitan Street R. Co. 218 Mo. 562, 117 S. W. 1124, it was
held: 'The motion for a new trial was not the first door for the question to enter,
and in our later decisions we have ruled that a question of such gravity must be
raised as soon as orderly procedure will allow. This in order that the trial court
may be treated fairly, and the question get into the case under correct
safeguards, and earmarked as of substance, and not mere color.'

10

It is manifest, we think, that the court only intended to express the condition of
appellate review to be that in the trial court constitutional questions should not
be reserved until the case had gone to judgment on other issues, and then used
to secure a new trial. The principle of the rulings is satisfied in the case at bar.
It is, as we have seen, an original proceeding in the supreme court, and upon
the report of the commissioner which brought the case to the court for decision
of the issues and questions involved in it the Federal questions were made
'under correct safeguards and earmarked as of substance, and not mere color.' It
is true the court has not referred to them in its opinion, but we cannot regard its
silence as a condemnation of the time or manner at or in which they were
raised. The motion to dismiss is therefore denied.

11

The assignments of error necessarily involve a consideration of the statutes.

The relevant provisions are contained in 10,301 of the Revised Statutes of the
state of 1909, and 8,966 of the Revised Statutes of 1899.

12

Section 10,301 provides that 'all arrangements, contracts, agreements,

combinations, or understandings made or entered into between two or more

persons, designed or made with a view to lessen, or which tend to lessen, lawful
trade, or full and free competition in the importation, transportation,
manufacture, or sale' in the state 'of any product, commodity, or article, or thing
bought and sold,' and all such arrangements, etc., 'which are designed or made
with a view to increase, or which tend to increase, the market price of any
product, commodity, or article, or thing, of any class or kind whatsoever,
bought and sold,' are declared to be against public policy, unlawful and void,
and those offending 'shall be deemed and adjudged guilty of a conspiracy in
restraint of trade, and punished' as provided.
13

Section 8,966 provides that arrangements, etc., such as described in 10,301,

having like purpose, and all such arrangements, etc., 'whereby or under the
terms of which it is proposed, stipulated, provided, agreed, or understood that
any person, association of persons, or corporations doing business in' the state,
'shall deal in, sell, or offer for sale' in the state 'any particular or specific article,
product, or commodity, and shall not, during the continuance or existence of
any such arrangement, . . . deal in, sell, or offer for sale,' in the state, 'any
competing article, product, or commodity,' are declared to be against public
policy, unlawful and void; and any person offending 'shall be deemed and
adjudged guilty of a conspiracy to defraud, and be subject to the penalties'
provided.

14

By 10,304 of the Revised Statutes of 1909, it is provided that domestic

offending corporations shall forfeit their charters and all or any part of their
property as shall be adjudged by a court of competent jurisdiction, or be fined
in lieu of the forfeiture of charters or of property.

15

Foreign offending corporations shall forfeit their right to do business in the

state, with forfeiture also of property, or, in lieu thereof, the payment of a fine.

16

In State ex rel. Hadley v. Standard Oil Co. 218 Mo. 1, 370, 372, 116 S. W. 902,
the supreme court held that the anti-trust statutes of the state 'are limited in their
scope and operation to persons and corporations dealing in commodities, and do
not include combinations of persons engaged in labor pursuits.' And, justifying
the statutes against a charge of illegal discrimination, the court further said that
'it must be borne in mind that the differentiation between labor and property is
so great that they do not belong to the same general or natural classification of
rights or things, and have never been so recognized by the common law or by
legislative enactments.'
Accepting the construction put upon the statute, but contesting its legality as

17

Accepting the construction put upon the statute, but contesting its legality as
thus construed, plaintiff in error makes three contentions: (1) The statutes, as so
construed, unreasonably and arbitrarily limit the right of contract; (2)
discriminate between the vendors of commodities and the vendors of labor and
services; and (3) between vendors and purchasers of commodities.

18

(1) The specification under this head is that the supreme court found, it is
contended, benefitnot injuryto the public had resulted from the alleged
combination. Granting that this is not an overstatement of the opinion, the
answer is immediate. It is too late in the day to assert against statutes which
forbid combinations of competing companies that a particular combination was
induced by good intentions and has had some good effect. Armour Packing Co.
v. United States, 209 U. S. 56, 62, 52 L. ed. 681, 684, 28 Sup. Ct. Rep. 428;
Standard Sanitary Mfg. Co. v. United States, 226 U. S. 20, 49, 57 L. ed. 107,
117, 33 Sup. Ct. Rep. 9. The purpose of such statutes is to secure competition
and preclude combinations which tend to defeat it. And such is explicitly the
purpose and policy of the Missouri statutes; and they have been sustained by
the Supreme Court. There is nothing in the Constitution of the United States
which precludes a state from adopting and enforcing such policy. To so decide
would be stepping backwards. Carroll v. Greenwich Ins. Co. 199 U. S. 401, 50
L. ed. 246, 26 Sup. Ct. Rep. 66; Central Lumber Co. v. South Dakota, 226 U. S.
157, 57 L. ed. 164, 33 Sup. Ct. Rep. 66.

19

It is true that the supreme court did not find a definite abuse of its powers by
plaintiff in error, but it did find that there was an offending against the statute, a
union of able competitors, and a cessation of their competition, and the court
said: 'Some of the smaller concerns that were competitors in the market have
ceased their struggle for existence and retired from the field.' This is one of the
results which the statute was intended to prevent,the unequal struggle of
individual effort against the power of combination. The preventing of the
engrossment of trade is as definitely the object of the law as is price regulation
of commodities, its prohibition being against combinations 'made with a view
to lessen, or which tend to lessen, lawful trade or full and free competition in
the importation, transportation, manufacture, or sale of any commodity, or
article, or thing bought or sold.' See Standard Oil Co. v. United States, 221 U.
S. 1, 55 L. ed. 619, 34 L.R.A.(N.S.) 834, 31 Sup. Cr. Rep. 502, Ann. Cas.
1912D, 734; United States v. American Tobacco Co. 221 U. S. 106, 55 L. ed.
663, 31 Sup. Ct. Rep. 632; United States v. Patten, 226 U. S. 525, 57 L. ed.
333, 44 L.R.A.(N.S.) 325, 33 Sup. Ct. Rep. 141.

20

(2) and (3). These contentions may be considered together, both involving a
charge of discrimination,the one because the law does not embrace vendors
of labor; the other because it does not cover purchasers of commodities as well

as vendors of them. Both, therefore, invoke a consideration of the power of

classification which may be exerted in the legislation of the state. And we shall
presently see that power has very broad range. A classification is not invalid
because of simple inequality. We said in Atchison, T. & S. F. R. Co. v.
Matthews, 174 U. S. 96, 106, 43 L. ed. 909, 913, 19 Sup. Ct. Rep. 609, by Mr.
Justice Brewer: 'The very idea of classification is that of inequality, so that it
goes without saying that the fact of inequality in no manner determines the
matter of constitutionality.' Therefore, it may be there is restraint of competition
in a combination of laborers and in a combination of purchasers, but that does
not demonstrate that legislation which does not include either combination is
illegal. Whether it would have been better policy to have made such
comprehensive classification it is not our province to decide. In other words,
whether a combination of wage earners or purchasers of commodities called for
repression by law under the conditions in the state was for the legislature of the
state to determine.
21

In Carroll v. Greenwich Ins. Co. supra, a statute of Iowa was considered which
made it unlawful for two or more fire insurance companies doing business in
the state, or their officers or agents, to make or enter into combinations or
agreements in relation to the rates to be charged for in surance, and certain
other matters. The provision was held invalid by the circuit court of the United
States for the district of Iowa on the ground of depriving of liberty of contract
secured by the 14th Amendment and of the equal protection of the laws. This
court reversed the decision, saying, after stating that there was a general statute
of Iowa which prohibited combinations to fix the price of any article of
merchandise or commodity, or to limit the quantity of the same produced or
sold in the state: 'Therefore, the act in question does little, if anything, more
than apply and work out the policy of the general law in a particular case.'
Again, 'If an evil is specially experienced in a particular branch of business, the
Constitution embodies no prohibition of laws confined to the evil, or doctrinaire
requirement that they should be couched in all-embracing terms.' And, 'If the
legislature of the state of Iowa deems it desirable artificially to prevent, so far
as it can, the substitution of combination for competition, this court cannot say
that fire insurance may not present so conspicuous an example of what that
legislature thinks an evil as to justify special treatment. The imposition of a
more specific liability upon life and health insurance companies was held valid
in Fidelity Mutual Life Asso. v. Mettler, 185 U. S. 308, 46 L. ed. 922, 22 Sup.
Ct. Rep. 662.' Other cases were also cited in illustration.

22

Carroll v. Greenwich Ins. Co. supra, is especially opposite. It contains the

elements of the case at bar and a decision upon them. It will be observed that
the statute, which it was said declared the general policy of Iowa, was a

prohibition against a combination of producers and sellers. There was the same
distinction, therefore, between vendors and purchasers of commodities as in the
Missouri statute, and the same omission of prohibition of combinations of
vendors of labor and services as in the Missouri law. The distinction and
omission were continued when the policy of the state was extended to
insurance companies. The law was not condemned because it went no farther,
because it did not prohibit the combination of all trades, businesses, and
persons. We held that the omission was not for judicial cognizance, and that a
court could not say that fire insurance might not present so conspicuous an
example of what the legislature might think an evil 'as to justify special
treatment.'
23

We might leave the discussion with that and the other cases. They decide that
we are helped little in determining the legality of a legislative classification by
making broad generalizations, and it is for a broad generalization that plaintiff
in error contends,indeed, a generalization which includes all the activities
and occupations of life; and there is an enumeration of wage earners in
emphasis of the discrimination in which manufacturers and sellers are singled
out from all others. The contention in deceptive, and yet it is earnestly urged in
various ways which it would extend this opinion too much to detail. 'In dealing
with restraints of trade,' it is said, 'the proper basis of classification is obviously
neither in commodities nor services, nor in persons, but in restraints.' A law, to
be valid, therefore, is the inflexible deduction, cannot distinguish between '
restraints,' but must apply to all restraints, whatever their degree or effect or
purpose; and that because the Missouri statute has not this universal operation it
offends against the equality required by the 14th Amendment. This court has
decided many times that a legislative classification does not have to possess
such comprehensive extent. Classification must be accommodated to the
problems of legislation; and we decided in Ozan Lumber Co. v. Union County
Nat. Bank, 207 U. S. 251, 52 L. ed. 195, 28 Sup. Ct. Rep. 89, that it may
depend upon degrees of evil without being arbitrary or unreasonable. We
repeated the ruling in Heath & M. Mfg. Co. v. Worst, 207 U. S. 338, 52 L. ed.
236, 28 Sup. Ct. Rep. 114, in Engel v. O'Malley, 219 U. S. 128, 55 L. ed. 128,
31 Sup. Ct. Rep. 190, in Mutual Loan Co. v. Martell, 222 U. S. 225, 56 L. ed.
175, 32 Sup. Ct. Rep. 74, Ann. Cas. 1913B, 529, and again in German Alliance
Ins. Co. v. Lewis, 233 U. S. 389, 418, 58 L. ed. , 34 Sup. Ct. Rep. 612. In
the latter case a distinction was sustained against a charge of discrimination
between stock fire insurance companies and farmers' mutual insurance
companies insuring farm property. If this power of classification did not exist,
to what straits legislation would be brought. We may illustrate by the examples
furnished by plaintiff in error. In the enumeration of those who, it is contended,
by combination are able to restrain trade, are included, among others, 'persons

engaged in domestic service' and 'nurses;' and because these are not embraced
in the law, plaintiff in error, it is contended, although a combination of
companies uniting the power of $120,000,000, and able thereby to engross 85
per cent or 90 per cent of the trade in agricultural implements, is nevertheless
beyond the competency of the legislature to prohibit. As great as the contrast is,
a greater one may be made. Under the principle applied a combination of all the
great industrial enterprises (and why not railroads as well?) could not be
condemned unless the law applied as well to a combination of maidservants or
to infants' nurses, whose humble functions preclude effective combination.
Such contrasts and the considerations they suggest must be pushed aside by
government, and a rigid and universal classification applied, is the contention
of plaintiff in error; and to this the contention must come. Admit exceptions,
and you admit the power of the legislature to select them. But it may be said the
comparison of extremes is forensic, and, it may be, fallacious; that there may
be powerful labor combinations as well as powerful industrial combinations,
and weak ones of both, and that the law, to be valid, cannot distinguish between
strong and weak offenders. This may be granted (Engel v. O'Malley, 219 U. S.
128, 55 L. ed. 128, 31 Sup. Ct. Rep. 190), but the comparisons are not without
value in estimating the contentions of plaintiff in error. The foundation of our
decision is, of course, the power of classification which a legislature may
exercise, and the cases we have cited, as well as others which may be cited,
demonstrate that some latitude must be allowed to the legislative judgment in
selecting the 'basis of community.' We have said that it must be palpably
arbitrary to authorize a judicial review of it, and that it cannot be disturbed by
the courts 'unless they can see clearly that there is no fair reason for the law that
would not require with equal force its extension to others whom it leaves
untouched.' Missouri, K. & T. R. Co. v. May, 194 U. S. 267, 269, 48 L. ed.
971, 972, 24 Sup. Ct. Rep. 638; Williams v. Arkansas, 217 U. S. 79, 90, 54 L.
ed. 673, 677, 30 Sup. Ct. Rep. 493, 18 Ann. Cas. 865; Watson v. Maryland, 218
U. S. 173, 179, 54 L. ed. 987, 990, 30 Sup. Ct. Rep. 644.
24

The instances of these cases are instructive. In the first there was a difference
made between landowners as to liability for permitting certain noxious grasses
to go to seed on the lands. In the second, the statute passed on made a
difference between businesses in the solicitation of patronage on railroad trains
and at depots. In the third, a difference based on the evidence of qualification of
physicians was declared valid. clared valid.

25

In Western U. Teleg. Co. v. Commercial Mill. Co. 218 U. S. 406, 54 L. ed.

1088, 36 L.R.A.(N.S.) 220, 31 Sup. Ct. Rep. 59, 21 Ann. Cas. 815, a distinction
was made between common carriers in the power to limit liability for
negligence. In Engel v. O'Malley, supra, a distinction between bankers was

sustained; and in Provident Inst. for Sav. v. Malone, 221 U. S. 660, 55 L. ed.
899, 34 L.R.A.(N.S.) 1129, 31 Sup. Ct. Rep. 661, deposits in savings banks
were distinguished from deposits in other banks in the application of the statute
of limitations.
26

Other cases might be cited whose instances illustrate the same principle, in
which this court has refused to accept the higher generalizations urged as
necessary to the fulfilment of the constitutional guaranty of the equal protection
of the law, and in which we, in effect, held that it is competent for a legislature
to determine upon what differences a distinction may be made for the purpose
of statutory classification between objects otherwise having resemblances. Such
power, of course, cannot be arbitrarily exercised. The distinction made must
have reasonable basis. Magoun v. Illinois Trust & Sav. Bank, 170 U. S. 283, 42
L. ed. 1037, 18 Sup. Ct. Rep. 594; Clark v. Kansas City, 176 U. S. 114, 44 L.
ed. 392, 20 Sup. Ct. Rep. 284; Gundling v. Chicago, 177 U. S. 183, 44 L. ed.
725, 20 Sup. Ct. Rep. 633; Petit v. Minnesota, 177 U. S. 164, 44 L. ed. 716, 20
Sup. Ct. Rep. 666; Williams v. Fears, 179 U. S. 270, 45 L. ed. 186, 21 Sup. Ct.
Rep. 128; American Sugar Ref. Co. v. Louisiana, 179 U. S. 89, 45 L. ed. 102,
21 Sup. Ct. Rep. 43; Griffith v. Connecticut, 218 U. S. 563, 54 L. ed. 1151, 31
Sup. Ct. Rep. 132; Chicago, R. I. & P. R. Co. v. Arkansas, 219 U. S. 453, 466,
55 L. ed. 290, 296, 31 Sup. Ct. Rep. 275; Lindsley v. Natural Carbonic Gas Co.
220 U. S. 61, 79, 55 L. ed. 369, 377, 31 Sup. Ct. Rep. 337, Ann. Cas. 1912C,
160; Fifth Ave. Coach Co. v. New York, 221 U. S. 467, 55 L. ed. 815, 31 Sup.
Ct. Rep. 709; Murphy v. California, 225 U. S. 623, 56 L. ed. 1229, 41 L.R.A.
(N.S.) 153, 32 Sup. Ct. Rep. 697; Rosenthal v. New York, 226 U. S. 269, 270,
57 L. ed. 216, 217, 33 Sup. Ct. Rep. 27; Missouri, K. & T. R. Co. v. Cade, 233
U. S. 642, 58 L. ed. , 34 Sup. Ct. Rep. 678.

27

And so in the case at bar. Whether the Missouri statute should have set its
condemnation on restraints generally, prohibiting combined action for any
purpose and to everybody, or confined it as the statute does to manufacturers
and vendors of articles, and permitting it to purchasers of such articles;
prohibiting it to sellers of commodities and permitting it to sellers of services,
was a matter of legislative judgment; and we cannot say that the distinctions
made are palpably arbitrary, which we have seen is the condition of judicial
review. It is to be remembered that the question presented is of the power of the
legislature, not the policy of the exercise of the power. To be able to find fault,
therefore, with such policy, is not to establish the invalidity of the law based
upon it.

28

It is said that the statute as construed by the supreme court of the state comes
within our ruling in Connolly v. Union Sewer Pipe Co. 184 U. S. 540, 46 L. ed.

679, 22 Sup. Ct. Rep. 431, but we do not think so. If it did, we should, of
course, apply that ruling here.
29

Judgment affirmed.